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Amarilis, Other/Just Looking in North Bergen, NJ

If i buy a Co-op can it be subleased?

Asked by Amarilis, North Bergen, NJ Thu May 3, 2012

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17
Depends on the building, in some you can, others not...consider working with an agent of your own, he/she will be your best guide...
1 vote Thank Flag Link Thu May 3, 2012
Yes but with restrictions and rules attached depending on the coop's house rules. So if you are looking to buy an apartment in Manhattan as an investment rather than your primary residence you should buy a condo or condop with no subleasing restrictions.

Best,

Mitchell Hall, Associate Broker
The Corcoran Group
917-312-0924
MHALL@corcoran.com
1 vote Thank Flag Link Thu May 3, 2012
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
It would depend on the the rules of the cooperative and also whether your loan would restrict you to have the apartment as your primary residence. Usually investment loans require a higher percentage down payment and sometimes a higher interest rate.
1 vote Thank Flag Link Thu May 3, 2012
I represent investors in real estate transactions involving "investor friendly" co-op buildings in Manhattan. These buildings are known for their "unlimited sublet policies from day one", i.e., investor can purchase an apartment and start subletting it from day one.

There are approximately 30 buildings of this kind in Manhattan. At any given month, no more than 2-3 apartments are offered for sale in these buildings. Many change ownership via off-market transactions. Average time to get such units in contract is less than 4 weeks. Average time to get a traditional co-op unit in contract is 40 weeks. "Investor friendly" co-op apartments are highly liquid and attract a solid demand.

On average, a cash investors earn more than 15% annually on his/her investment by purchasing and subleasing a cooperative apartment in these "investor friendly" co-op buildings.
The math is quite simple.

Let's consider Upper East Side co-ops in pre-war low-rise buildings.

Average co-op studio price is $300,000; $600 - $650 per square foot (Average 1BR price is $350,000). An average monthly rent for a studio is $1900. Average monthly maintenance for a studio apartment is $750. Annual Net Operating Income (NOI) = $13,800. CAP = 4.6%. Compared to investing in condos - by purchasing and renting a condo in Manhattan, an investor will not earn more than 2.00% - 2.50% annually.

Moreover, over the last year, on the average, co-op prices increased by more than 15% in Manhattan (see most recent Market Reports published by the most leading real estate brokerage companies in Manhattan.)

Undisputedly, there is always a chance that a board might amend the co-op bylaws and forbid investors to purchase units in the building or create restrictions on subleasing. However, the chances of this happening are very slim. Usually, the board needs 66% voting approval from all of the shareholders in the co-op in order to to amend bylaws. Most of the shareholders in such buildings are investors who sublease the units once they close on a purchase. Such shareholders/investors will never vote against their own interests. Thus, it is nearly impossible for the board to gather the necessary 66%. That's precisely the reason why these buildings are called "investor friendly".

Today, this type of co-op deals is an incredible investment opportunity that certainly deserves a careful consideration.

If you are interested in investing in co-op “investor friendly” buildings in Manhattan or would like to get more information about this type of deals, please contact me at md@findsider.com.
0 votes Thank Flag Link Sun Dec 1, 2013
if your coop board approves it then it can be subleased.
0 votes Thank Flag Link Sun May 13, 2012
It can be with board approval.
0 votes Thank Flag Link Mon May 7, 2012
Hi, It depends on the building and their policy, everyone is different. Your best bet is to contact the management company directly to get the most accurate info.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
William Raveis Legends Realty Group
914.406.9023
0 votes Thank Flag Link Fri May 4, 2012
Dear Amarillis,

It completely depends on the Coop's rules. Some Coops allow one or two years of subletting after the shareholder has lived there for a year or two. Every Coop has its own rules on subletting. Very few Coops allow unlimited subletting. I only know of two.

If subletting for investment purposes is your goal, I would suggest you purchase a Condo where subletting is flexible. Depending on rules you may even wish to consider a Condop which is a Coop with Condo rules. However not every Manhattan Condop is flexible on subletting.

If I can be of any assistance to you, please feel free to contact me.

Best of luck,

Ross Ellis
Licensed Real Estate Salesperson
Member of Real Estate Board of New York
212.317.7828 direct
770 Lexington Avenue, 10th Floor
New York, NY 10065
rellis@halstead.com
0 votes Thank Flag Link Fri May 4, 2012
Yes, no, or maybe.

I know of a co-op on the Lower East Side that used to have very liberal subleasing policies, like a condo. Then one day the board decided this policy was hurting the building too much, and overnight they prohibited any new subleasing.

So if you plan to rent your place, you take a risk if you buy a co-op. How much of a risk? No one really knows. People who want to sell apartments will try to tell you otherwise, and who knows, maybe they're right, maybe the building they want you to buy into will never ever ever change its policy. But I own a co-op and I can tell you, board membership can completely change in just one election.

So you need to consider the risk very carefully.

Karla Harby
Licensed Real Estate Salesperson
Rutenberg Realty
New York, NY
kharby@crrnyc.com
212-688-1000x146
0 votes Thank Flag Link Fri May 4, 2012
If your goal is to sublet and make some income for the long term, I suggest buying into a condo which has liberal subletting rules.

Some co-ops don't even allow renting, and some are more liberal like 3 out of 5 years but you have ot live in it for the first 2 then again when the 3 years are up.

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If I can help you with your next purchase, feel free to reach out ot me at your convenience.

Jennifer Chiongbian
SVP/ Associate Broker
Rutenberg Realty NYC
9172502284
0 votes Thank Flag Link Thu May 3, 2012
Amarilis,
Co-op by their nature expect to have the units owner occupied as implied in the name - shareholders cooperatively living in the building they collectively own. Co-op boards make rules on subletting, pet policy, qualifications for purchase, etc. There are some co-ops that do not permit any subletting at all. There are a few, very few, which allow it from the start. Most have a policy somwhere in the middle. The most common is to permit 2 out of 5 years, with board approval after 1-2 years of being owner-occupied. Additionally some limit how many can be rented out at one time. Some charge you a surcharge for subletting. It would be very important for you to know the specific rules of any building your are thinking of buying in. If you goal is investment and not to occupy it, you are much better off with a condo.
I strongly suggest you work with a skilled, experienced buyers agent, as we can guide you through the process.

Best,
Jenet Levy
Halstead Property, LLC
jlevy@halstead.com
212 381-4268
http://jenetlevy.halstead.com for all NYC listings
0 votes Thank Flag Link Thu May 3, 2012
Some co-ops will allow subleasing after you lived there for over a year or two, depending on the coop rules. If you are considering buying a rental property, a condo may be a better choice. The boards are more flexible and easier to get the tenants approved. I have helped many investors buy rental properties. Hope this helps.
0 votes Thank Flag Link Thu May 3, 2012
Hi Amarilis, it all depends on the building. Each co-op has it own rules ranging from almost no restrictions to almost no subletting. Best to confirm with your broker well before making a commitment if this is really important to you. In almost all cases there will be board approval required for your proposed subtenant and in many cases fees will be levied. Also understand that the approval process can take some time so if you buy a co-op and plan to sublet it, allow some weeks of lead time for approval before the subtenant actually moves in and starts paying rent. If I can be of help in your search please let me know. Best,
Charlie Summers, Bellmarc 917-376-1648
0 votes Thank Flag Link Thu May 3, 2012
hello Amarillis,
You can definitely sublease a coop. However, it will all depend on the house rules.
You may have to reside in the unit for 1 year or two years before you lease it and some coops will not let you sublease indefinitely. Some have a max number of years you will be able to sublet.
So moral of the story, you can sublease BUT it all depends on teh House rules.
Good Luck!
Fern Hamberger
Vice President Associate Broker
Citi-Habitats Relocation and Corporate Headquarters
fhamberger@citi-habitats.com
0 votes Thank Flag Link Thu May 3, 2012
If completely depends on the coop. Most allow leasing, but there are restrictions. Typically, you have to own the coop for at least one year, then you can rent out for a limited period of time -usually a maximum of two years.

There are, however, coops with liberal subletting rules. In addition, there are buildings referred to as condops. These are coops with condo rules. They are coops with unlimited subletting rights.

I have a list of coops with liberal subletting rules. Please feel free to contact me and I would be happy to help you. You can find my profile on our company's website at http://www.bellmarc.com.

Best,

Steve Weiss
Vice President
Bellmarc Brokerage Ltd.
936 Broadway
New York, NY 10010
(212) 239-0900x274
(917) 414-1068
sweiss@bellmarc.com
0 votes Thank Flag Link Thu May 3, 2012
In many cases yes, most coop boards will require you to live in unit for anywhere from 1-2 years before you can sublet it.
Keep in mind that whomever you rent to must be approved by the coop board as you were.
0 votes Thank Flag Link Thu May 3, 2012
Ask for and read the rules of the co-operative. The answer will be in there, along with a lot of other things you should know before you buy. You may be surprised..
0 votes Thank Flag Link Thu May 3, 2012
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